At the close: Sterling and stocks break apart

Jake Cordell
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Sterling and stocks headed in opposite directions today as the FTSE 100 climbed higher yet again
Sterling and stocks headed in opposite directions today as the FTSE 100 climbed higher yet again (Source: Getty)

In yet more proof the stock markets and the UK economy don't always move in lock-step, the FTSE 100 jumped today, while the pound slumped, and signs of a post-referendum slowdown grew.

The index of the UK's top 100 companies started the day down as it looked like the post-referendum bounce was drawing to a close. However, that was not the case as the FTSE 100 went back on the front foot and rallied to close up 0.4 per cent at 6,545.37.

Other than that, it was a pretty dark day out there, as investment funds lined up to suspend trading for fear of massive outflows and the services sector purchasing managers' index (PMI) also pointed to a slowdown.

Read more: Should Mark Carney be the next prime minister?

Anybody who hasn't yet booked their summer getaway had extra disappointment heaped upon them after the pound slumped nearly two per cent against the dollar, falling through $1.31 for the first time since 1985 and holding at $1.3044 at pixel time.

Sterling was also off 1.4 per cent against the euro at €1.1752 - its lowest level since 2013.

Aviva, Standard Life and M&G have now all stopped customers withdrawing cash from their real estate funds - news that comes on the same day Mark Carney said he was worried about the health of the commercial real estate sector.

The governor of the Bank of England also said signs of a post-vote slowdown were "crystallising" and cited a number of risks which had the Old Lady concerned.

Chris Beauchamp, senior market analyst at IG, said: "The virtues of a falling currency were apparent this afternoon, as the FTSE 100 gamely moved higher even as every other major stock index in Europe and the US fell by the wayside.

"With UK property funds in turmoil and looking vulnerable to further falls, the list of ‘safe haven’ dividend payers has got shorter, and this helps to explain why stalwart firms like utilities and pharmaceuticals are in the ascendant. Were it not for this rush to relative safety, it is almost certain that the FTSE 100 would be hurtling lower as well."

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